CORPORATE SOCIAL RESPONSIBILITY AND PROFITABILITY OF QUOTED NIGERIAN FIRMS: THE MEDIATING EFFECT OF FIRM SIZE

Abstract

The study examines the link between Corporate Social Responsibility (CSR) and profitability with emphasis on the role of firm size. The population consists of 106 quoted Nigerian non-financial firms, out of which a sample of 86 firms was selected based on data availability. Using hierarchical linear regression analysis, the study found evidence that firm size has significant effect on the CSR-Profitability link; confirming that larger firms have the capacity to invest in CSR activities more than their smaller counterparts. It is also found that corporate donations and employee relations have significant positive effect on profitability of the firms and that this effect is significantly improved by the mediating variable. The results are consistent with Stakeholders theory and suggest that responsible business practices towards primary stakeholders can be profitable and beneficial to Nigerian firms. These results justify the existing corporate investments in CSR activities. Therefore, the study recommends that Nigerian firms should adopt CSR strategy for creating shared value (CSV); mitigating risks (of corruption, scandals and environmental accidents); attracting and retaining quality workforce; gaining competitive advantage and improving financial performance. Regulatory authorities on their part should evolve measures that monitor corporate investment in CSR to promote an honest culture of sustainable economic development.

Keywords

• Corporate Social Responsibility
• Profitability
• Stakeholders Theory
• Sustainable Economic Development